The Mother of All Sequesters: Fiscal Policy in the 1940s
Overview
In the early 1940s, war-driven deficit spending and loose monetary policy lifted the economy out of the Depression. One of the most interesting economic aspects of this period was that growth continued despite a massive withdrawal of fiscal stimulus in 1945 and 1946. Using today’s terminology, the sizeable reduction in government spending could be described as “the mother of all sequesters.”